RDC Fare Watch March 2017 - Europe LCC fares down 18pc - We explain the full impact of the timing of Easter

While we’ve commented in our last three fare articles about the general softening of fares around Europe across 2016 and 2017, performance appears particularly poor in March. However, much of this can be explained by the timing of Easter. In 2016, Easter Sunday fell on the 27th March. This year Easter Sunday fell on the 16th of April. Therefore, the March 2016 fares are slightly inflated above where they should be, and a direct comparison with 2017 isn’t doing justice to the full picture.

Graph showing - Fares in March 2017 versus 2016 by purchase point

Figure 1: Fares in March 2017 versus 2016 by purchase point

Analysts will frequently point to figures like these and say “Easter explains this, end of story.” – At RDC we like to give you a little more insight.

Why does Easter have such a significant impact on fares?

In the majority of European countries with a history/culture of Christianity, the Easter weekend features public holidays on Easter Monday and (albeit less widespread) Good Friday. Furthermore, the vast majority of schools will have one or more weeks of holiday at this time. Therefore this is the ideal time (outside of summer holidays) for families to take a break that involves air travel, whether it’s a beach holiday, skiing or visiting relatives. This increase in demand creates higher fares. There will be a small counter-effect of a loss of business traffic on the public holidays, but generally speaking this effect is negated by the volume of leisure travellers.

Are some airlines affected more than others?

In general, our data suggests that all low cost airlines are affected by the timing of Easter. Comparing the change in fares from March 2017 to March 2016 against the change from February 2017 to February 2016 (to eliminate other market trends as much as possible) shows that only one airline saw better year-on-year performance in March than February (Volotea).

Graph showing - Airline fare performance March and February 2017 versus 2016

Figure 2: Airline fare performance March and February 2017 versus 2016

The airlines that are most affected by Easter are those that are reliant solely on leisure routes. In particular the airline with the highest exposure in our data appears to be Monarch. February 2017 saw an increase in fares of 9% relative to 2016 for Monarch, but for March the same comparison sees a decrease in fares of 38%, a 47 percentage point swing suggesting Easter inflated their fares in March 2016.

Jet2 experienced the greatest year-on-year decreases in fares (see January fare article for a full explanation of this). Other airlines with a large decline in fares are Norwegian (33%), Transavia and Transavia France (both 21%).

Which countries are most affected by the timing of Easter?

Using a similar comparison to that described above – the chart below shows the relative performance of each country in February and March to highlight the impact of Easter. Those appearing towards the bottom right of the chart witnessed a significant drop in year-on-year fare performance in March compared to February. The country that appears to be the worst affected is Gibraltar – March fares were down 33%, following on from a February that saw the same fares up by 33%.

In general we can see that countries with a high reliance on leisure traffic (Spain, Portugal, Greece Gibraltar etc.) saw year-on-year fare performance in March drop compared to the trend set in February – suggesting that Easter inflated their performance the year before. The “special case” in this chart is the United Kingdom, which contradictorily saw better year-on-year fare performance in March than February. This is symptomatic of the wider problems affecting the United Kingdom (Brexit uncertainty, poor exchange rates) which are impacting the UK more than the general market trends.

Graph showing - Country fare performance March and February 2017 versus 2016 (bubble size = seat capacity)

Figure 3: Country fare performance March and February 2017 versus 2016 (bubble size = seat capacity)

The Easter effects we’re observing in March should be equally true in reverse for April. Will it be enough to overturn the general market trends and allow us to report on positive figures for the first time since we started writing these articles? The only way to find out is to follow us and wait for the next instalment.

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By Dan Irvine / Connect on LinkedInImage of Dab Irvine